More Companies Must Implement Anti-corruption Compliance Programs to do Business with Argentine Government

In March 2018, Law No. 27,401 (the “Law”) came into force. This Law penalizes legal entities for bribery (“cohecho”) and other crimes related to public officials (see https://www.marval.com/publicacion/nueva-ley-sobre-responsabilidad-penal-de-personas-juridicas-y-programas-de-compliance-para-casos-de-corrupcion-13077&lang=en). The Law also regulates anti-corruption compliance programs, which are referred to as “integrity programs”.

 

Particularly, article 24 of the Law establishes that having a compliance program will be a requisite for contracting with the Argentine Government when: (a) according to applicable regulations, due to its value, such contracts must be approved by a public official ranked as or above a level of Minister; and (b) the contracts in question are specific agreements related to the public administration (see https://www.marval.com/publicacion/nueva-reglamentacion-sobre-programas-de-integridad-anticorrupcion-13179).

 

 

Afterwards, Decree No. 277/2018, which regulates the Law, set forth the total value of the contracts included in article 24 of the Law. Such value is established in the annex to article 9 of the “Regulation of the Regime to Contract with the Federal Administration” –approved by Decree 1030/2016– (the “Regulation”) to approve procedures and/or award contracts by Ministers, officials with rank and category of Ministers, the General Secretary of the Argentine Executive or highest authorities of decentralized bodies.

 

The value included in the Regulation is set forth in modules and classified according to public officials’ categories. While the module rose to ARS 1,000 in 2018, in 2020 it rises to ARS1,600. The number of modules that applies to each category also increased in 2020 with regard to 2018.

 

Considering such framework, in 2018, the acts that fell within the scope of article 24 of the Law were the following:

 

- public or private bids and tenders or public auctions that exceeded ARS 50,000,000 (approximately USD 2,506,266 at the official selling exchange rate as of April 6, 2018), and

- abbreviated bids for tender and simple adjudications that exceeded ARS 30,000,000 (approximately USS 1,503,759 at the official selling exchange rate as of April 6, 2018).

 

However, in 2020 the following acts are included:

- public or private bids and tenders or public auctions that exceeds ARS 128,000,000 (approximately USD 1,969,231 at the official selling exchange rate as of May 5, 2020) and

- abbreviated bids for tender and simple adjudications that exceeds ARS 80,000,000 (approximately USS 1,230,769 at the official selling exchange rate as of May 5, 2020).

 

Although the value of the module in Argentine Pesos increased by 60%, the devaluation of the Argentine Peso against the US Dollar was higher. Therefore, the obligation to implement an anti-corruption compliance program is now reaching more contracts with the Argentine Federal Government than the amount reached in 2018, when these regulations were enacted. Indeed, the reduction of the minimum amount in US Dollars was of 21% for public or private bids and tenders or public auctions, and of 18% for abbreviated bids for tender and simple adjudications.

 

Thus, a higher number of legal entities now needs to implement anti-corruption compliance programs in accordance with the provisions of Law No. 27,401 to enter into contracts with the Argentine Government.